As a law firm grows, a lawyer’s ability to handle all of the tasks that go along with it becomes increasingly difficult. At a certain point, you may need to bring on others to help with things like billing, accounting and client trust accounts. But who can actually access those accounts?
What the rules say
Having a bookkeeper or paralegal assist with trust account entries and general management is common. However, having someone else involved doesn’t relieve an attorney of their responsibilities.
Ultimately lawyers can delegate and provide access to law firm trust accounts to whomever they’d like. But you should keep in mind that no matter who does something incorrectly with a trust account, the liability ultimately falls on the attorney. Your license to practice law could be at risk, even if you had no knowledge of what was happening[1].
Delegating the responsibility of managing trust accounts shouldn’t be taken lightly. No matter who deals with trust accounts, you will still need to be involved.
All rules surrounding trust accounts are applied the same as if you were completing them, regardless of who is actually handling the task.
Precautions to take
While you may not be able to personally oversee every single transaction, you can put procedures into place to avoid bookkeeping inaccuracies and potential money laundering from client trust accounts. Make sure you have a clearly written policy as to how trust accounts should be maintained as a starting point.
Each month, require three-way reconciliations. Carefully review these documents, as well as the bank statements. Look for large deposits or withdrawals or unusual transactions[2].
If you have someone else handling trust accounts, make sure they’re familiar with all of the rules. Borrowing from IOLTA accounts, overdrafts and commingling are all mistakes that can be easily avoided with some training. If you’re not sure where to start, reach out to your bar association ethics committee for recommendations. For the cost of one online course, you can avoid your paralegal making serious trust account errors that could get you disbarred if you don’t catch them in time.
Also limit how disbursements can be made. Require two signatures for every disbursement, or if it will be just you overseeing the account and not a partner as well, you can make it just your signature.
References
1. Delegation of Trust Accounting Duties
2. Avoiding Ethical Concerns with Client Funds